DreamWorks Strikes Another Licensing Deal With Netflix, Establishing Home for TV Content

DreamWorks Animation and Netflix announced a multiyear deal that includes more than 300 hours of new programming from DreamWorks’ recent push into shorterform television content. Typical for a content agreement, the details of the economics and specific programming are not available, but we can see strategically that this deal could be a win for both parties.

We’ve said for years that the television content ecosystem is much healthier than that for movies, and DreamWorks has taken several steps to supplement its movie business with shorter-form content. We believe DreamWorks had TV content in mind when it acquiring Classic Media last year, a deal that added new intellectual property. Management has publicly stated it is looking to share in the economics of creating television content, and this is probably the best way without owning a distribution platform.

For Netflix, this new licensing agreement enhances its kids’ programming lineup and provides unique, differentiated content in an important genre for its streaming service. Also, this content will fill in the hole from not renewing its deal with Viacom VIAB for Nickelodeon-branded content, which is now licensed on Amazon AMZN . We think kids’ programming makes sense on a streaming service, given the rules and limitations on advertising to children; for example, Disney DIS does not sell advertising on Disney Channel in the United States.

This deal deepens the relationship between the two companies. Netflix already secured the licensing rights for new DreamWorks films in the pay TV window that was previously held by HBO. In February, Netflix and DreamWorks announced their first ever Netflix original series for kids based on the film Turbo , which premiers in July. Turbo F.A.S.T. will be an episodic animated series that will pick up where the feature film ends.